Complete factor price equalization cannot be achieved


Problem

1. In suppose the country is producing in equilibrium at A9. If Px then increases such that it would lead to production at B9 on the "normal" PPF, would the same change in relative prices lead to production precisely at C9 in the specific-factors case? Why or why not?

2. "Within the Heckscher-Ohlin framework, complete factor price equalization cannot be achieved in the presence of transportation costs." Agree? Disagree? Explain.

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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International Economics: Complete factor price equalization cannot be achieved
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